Nov 08
11
Here in Texas, we have this crazy thing referred to as a deregulated electrcity market. Unlike most other areas of the country where electric rates are heavily regulated by the state public service commission, here multiple providers are allowed to market electricity directly to consumers at whatever price they like, with a third party maintaining the lines and infrastructure.
Since contracts are based on current market prices, the rates fluctuate over time. For instance, in June I signed a one-year contract at a rate of $0.178 per kWh, which at that time was a very competitive rate. I had to sign because my previous contract expired and the alternative was to go to my provider’s month-to-month plan at about $0.25 per kWh.
Since I signed my contract, the rates have come down significantly. Why? The majority of electricity is generated using natural gas, the price of which spiked over the summer and has since come crashing back down. I decided to look into whether the rates had fallen far enough to where it would make since to break my contract and pay the early termination fee of $69.95. I was shocked to find that the I could now get a two-year contract at a rate of $0.134 per kWh, a difference of $0.044 per kWh. Assuming usage of 1500 kWh per month (not a stretch in a 40 year old 2800 square foot home), my savings would be about $66 per month. In other words, I would almost completely make up for the early termination fee in the first month.
So if you were forced into a contract during this summer’s peak in electric prices, it would be a good time to re-evaluate your contract and see if breaking the contract makes since. In Texas, you can find the current offers in your area at PowerToChoose.org.